New frontiers and challenges for affordable housing provision in India

Sengupta, U. (2014). New frontiers and challenges for affordable housing provision in India. In J. Bredenoord, P.V. Lindert, & P. Smets (Eds.), Affordable Housing in the Urban Global South: Seeking Sustainable Solutions (pp.137-153). Routledge.

Published in:Affordable Housing in the Urban Global South: Seeking Sustainable Solutions

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List of Abbreviations

CBO Community-based Organisation

DDA Delhi Development Authority

EMI Equated Monthly Instalment

EWS Economically Weaker Section

FAR Floor Area Ratio

FDI Foreign Direct Investment

GDP Gross Domestic Product

GOI Government of India

HDFC Housing Development and Finance Corporation

HFC Housing Finance Corporations

HIG High Income Group

HUDA Haryna Urban Development Authority

HUDCO Housing and Urban Development Corporation

IT Information Technology

ITES Information Technology Enabled Services

INR Indian Rupees

JNNURM Jawaharlal Nehru National Urban Renewal Mission

KMDA Kolkata Metropolitan Development Authority

LIG Low Income Group

MFI Micro Finance Institutions

MGI McKinsey Global Institute

MIG Middle Income Group

NUHHP National Urban Housing and Habitat Policy

NBC National Building Code

NGO Non Governmental Organisation

ULCRA Urban Land Ceiling and Regulation Act, 1976

WBHIDCO West Bengal Housing and Infrastructure Development Authority

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1 Introduction

Affordable housing has become a major policy challenge in urban India (Table 1)

for the last few decades. The 11th Five-Year Plan identified housing deficit in

India to be 24.7 million in 2007 - the EWSi representing the highest housing need

with 21.78m units. To address this the Government of India has initiated reforms

in line with international trends of enabling housing to work (World Bank, 1993).

Primarily, the focus has been on fostering private sector participation in

providing affordable housing for the EWS and LIG and instituting mass housing

for accelerated housing growth. These changes are altering the landscape of low-

to-middle income housing in terms of consumption and production. Evidence

suggests that the affordable housing sector is rapidly becoming the fastest

growing segment in the Indian real estate sector.

Concomitantly, the definition of affordable housing is changing to include

affordability of a much wider section of the society and in tandem, there is a

visible change in the notion of home, identity and lifestyle. The steadily growing

middle class - deemed the most visible urban embodiment of globalization

(Fernandes, 2004) - is the largest consumer group of housing triggering a

discernible shift in what constitutes a ‘home’. There is a growing evidence of

private developers fashioning affordable housing in the templates used for MIG

and HIG housing. Indeed, mass housing cannot succeed without the benefit of

standardisation and uniformity imbibing efficiency in the supply chain, sweeping

generalisation on quality and standards raises two critical questions: first, is the

stock that is targeted to low-income households aligned to their needs and

expectations? And second, what is an affordable housing, how it is defined,

whose affordability are we talking about? The answers to these questions provide

some insight into the extent to which affordability problems arise from

inconsistency in quality, costs and aspirations. While defining affordability in

literature, there has been a consistent effort to analyze whether households have

an affordability problem because they choose to consume housing that is better

quality than affordable stock (Whitehead, 1999; Hancock, 1993; Hulchanski, 1995;

Thalmann, 2003; Quigley & Raphael, 2004). The question that underpins this

chapter is whether paradoxically, they might need to consume this more

expensive housing because there is no other housing available.

There are inherent contradictions and paradoxes in the housing ‘dream’ currently

being packaged as affordable homes in India and investigating this aphorism is

where this chapter is situated. The chapter begins with an overview of the past

and current government policies and programmes to understand the factors that

led to the gradual transition for affordable housing from being a state-led to

market provision. This is followed by an analysis of the emerging trend in

articulating affordable housing by both government and market and role of

housing standards and guidelines in shaping this trend. The paper uses

empirical study of a pioneer affordable housing model from Kolkata to highlight

the conceptual contradiction associated with the perception and marketability of

affordable housing. Specifically, given that privately provided affordable housing

could achieve mass housing proportions, it is important to test the notion that the

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equation between quality, price and affordability is neither simplistic nor

straightforward. Rather, it depends on how people in their everyday lives

interpret affordability and how the market/developers respond to such

interpretation.

The remainder of the paper proceeds as follows. The section II charts the

historical development of affordable housing in India during pre-and post 1991

era. Section II presents a contemporary interpretation of affordability in India.

Section IV explores key features of Sukhobristi model to assess its role and

impact on affordable housing in India. The final two sections analyse and

conclude.

Table 1 Urban Housing Shortage in India

1961 1971 1981 1991 2001 Total Population

439.2 548.2 683.3 846.3 1028.6

Urban Population

78.9 109.1 159.5 217.5 286.1

Housing shortage

3.6 3 7 8.2 10.6

% shortage 20.4 12.29 19.62 16.84 16.56

Source: Compiled by Author based on information from Census figures

2 Policy responses to housing crisis: Development of affordable

Housing in India

Housing since 1947

Broadly speaking, housing for urban poor has been a politicised, contested and

visible cornerstone of welfare provision in India. The welfare link is a no-frill

recognition to ‘unaffordability’ in the society, but, financial commitment has been

patchyii and affordable housing provision has centred on targeted subsidy to the

individuals and loan assistance to governmental agencies through HUDCO. The

government focus also lay on fostering partnership with NGOs, CBOs, co-

operatives and to some extent to the private sector to improve the supply chain.

For instance, housing co-operatives in India - identified with public sector

activities for their dependence on public sector funds (Renaud, 1985) in early

years - have grown to 92,000 organisations from 5,564 in 1960 and has an

estimated housing output of 2.5 million homes. The movement has now evolved

with a strong institutional framework based on concept of ‘self-financing’ and

diversity in financial portfolioiii.

But it is really the two-pronged strategy - sites and services and public housing –

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seemingly laden with contrasting objectives that defined social housing

landscape in early years. The former, as a form of progressive development was

quintessentially pro-poor in concept but in practice owing to the World Bank’s

involvement, it relied excessively on neoliberal principles of affordability, cost

recovery and replicability to succeed, which was ahead of its time. Nationwide

output remained poor as difficulties in site assembly and local resource

mobilization made large-scale implementation nearly impossible (Pugh, 2001).

The principle of progressive development (including those in slum upgrading

programmes) ran contrary to local building code and land use regulations

(Buckley and Kalarickal, 2006). The latter thus became the primary Indian

government approach to affordable housing for many years. Public housing was

aimed at income eligible households at highly subsidized rent. However, low

overall output, allocation discrepancy and high maintenance cost made a strong

economic case for moving away from this approach (Sengupta, 2006). Between

1970 of 2000, public housing production in India averaged 1 unit per 5000

people. City authorities such as the DDA are criticized for producing rather fewer

houses despite having acquired large reserves of land (Pyane, 2011).

The era, labelled as the ‘modernist’ period, is marked by the concept of

affordability trapped in the dilemma of perception - a ‘stereotype’ on how people

live in shanties and slums. A typical design approach for affordable housing was

then to compress a home into a single room with very basic provision. They were

built on welfare-state principles with a low commodity value exhibiting a form of

‘slummification’ (Wadhwa, 2007). By the late 1980s, following the international

trend and Global Shelter Strategy, in particular, National Housing Policy was

announced in 1987 with government’s role firmly established as provider for the

poorest group and facilitator for other income groups. The draft also laid

foundation for regulatory reforms, which would benefit the housing industry a

decade later.

Housing after 1991

India’s housing and real estate has relatively a short history. It started in 1991

when economic reform led to multi-dimensional reforms in trade, industry and

finance sectors including housing and the real estate. The country’s GDP grew to a

notable 9.2 per cent in the year 2006/07 from 5.8 per cent in 2000/01. The reform paved

way for relaxing regulatory barriers to encourage private sector participation -

such as 100 per cent FDI in integrated township development, abrogation of

ULCRA and reduction in stamp duty - designed to boost housing supply and

removing red tape. Interestingly, housing and property prices remained stable,

despite the global financial crisis attributed largely to the culture of home purchases

through personal savings and other sources of capital outside the banking and mortgage

system.

Housing Boom and the widening gap in affordability levels

The domestic boom has however, had varying impact on different income

segments. Owner-occupiers gained most from price inflation. This author’s

interview with households in older housing estates such as Kalindi in Kolkata

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revealed that housing prices tripled since 2003/04, which aligns with

Chandrasekhara’s (2011) observation that housing prices in 2009 were above

2007 levels in Kolkata (up 85%), Mumbai (up 26%) and Delhi (up 13%) after

prices rose 30% in 2008. Housing has consistently been seen as returning as

good if not better than other investment portfolios such as bonds, fixed deposits

and post office savings etc. Rapid appreciation of property prices led to higher

disposable income raising purchasing power of a segment of the population,

even if it means 2-5% of the national population. In a country of 1.21 billion, 5%

equates to 60 million, roughly the size of the population of the UK. Further, there

has been a dramatic rise of middle class in India as a consequence of

globalisation (Deshpande 1998; Lakha 1999) and their lifestyle and consumption

pattern has been definer of a group with a different housing aspirations and

attitudes. The steadily growing middle class, currently accounting for 30% of the

population, is seen crucial to sustain higher-end housing across the country. The

residential skyscrapers such as the pair of Imperial Towers in Mumbai or

Kolkata’s Urbana, Burj Al Hind in Calicut, Kerala, or Gurgaon’s DLF Tower have

become today’s urban housing spectaculars that evoke both technological and

architectural sublime although sit uncomfortably with affordable housing

principles.

The rise of middle class has been equated with the rise in affordability levels in

that homes across the country are more affordable than they were five or ten

years ago (Shetty, 2012). According to HDFC, the prices of homes may have gone

up but median income of average urban households has trebled in the past ten

years. The affordability level, measured through income to price ratio declined to

4.6 times household’s annual income in the year 2012 from 22 in the year 1995

(Business Standard, 2012). Whilst this is a significant achievement the variegated

geographic and socio-economic background of the Indian population makes such

generalisation problematic. Median household income in metro cities is higher

than the secondary cities such as Ahmedabad, Patna, Surat or Jaipur, but their

housing predicament can be far worse. Up to 54% of the population in major

cities such as Delhi and Mumbai live in slums conditions compared to the national

average of 28% (MGI, 2010). Moreover, the recent housing boom has been

accompanied by widening income gap across different income groups and

resultant decline in housing affordability of the lowest segment of the population.

Overall, there is a good progress in housing supply in the last decade or so.

Between 1991 and 2001 the number of housing units grew by about 54 million;

housing quality improved; and the number of households living in cramped

conditions dropped. In cities home ownership rate rose from 63% to 67% and in

the country by one percentage point to 95% (GOI, 2007). New schemes such as

JNNURM and VAMBAY have led the production of millions of low-cost homes

across India aimed at resettling slum dwellers living below poverty line. Public

private partnership (PPP) has also been a delivery vehicle for affordable housing

through a system of cross subsidy. Since 2007, NUHHP requires up to 10-15

percent of land in every public/private housing project or 20-25% of FAR/floor

space index (whichever is greater) to be reserved for EWS/LIG housing through

appropriate legal stipulations and spatial incentives. Many proactive

development authorities such as Noida and HUDA have imposed ceilings on the

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floor area of residential units in a bid to increase share of affordable units in

developers’ schemes. Despite these concerted efforts, metro cities in India

continue to witness both quantitative and qualitative housing problems. PPP for

example, has been criticized for inelastic supply, causing real price appreciation

eventually pricing low-income dwellers out of the system (Sengupta, 2006). Due

to lack of any normative framework on affordability private developers are free to

determine what constitutes affordable range. Between 2009-2012, developer-

initiated affordable housing across Indian cities was priced between

INR500,000-1,000,000 (US$ 9090-18181) (Jones Lang Lasalle, 2012).

3 Affordable housing: Contemporary interpretation

Historically, the idea of affordable housing has been subject to vagaries of

perception and definitional issues. For the most part ‘affordable housing’ has

been loosely synonymous to low-income housing in all government documents.

The idea of inability to pay was rather ideologically viewed and not properly

analysed. Affordable housing has also been interchangeably used with ‘low-cost’

housing, the distinction between the two is now starting to be articulated (Table

2). Championed by HUDCO and maverick architects such as Laurie Baker, low-

cost housing had a strong focus on building materials and technology and

catered to the poorest group.

Table 2 Low-cost and Affordable housing in India Parameters Low-cost housing Affordable housing

Amenities Bare minimum to none Basic

Target income class EWS & LIG LIG and MIG

Size <28 m2 28-112 m2

Location Inner city, some in periphery Inner city

Developer Government Private developers and

Government

EMI* to gross monthly

income

> 30 % > 40 %

Finance sources MFIs Commercial banks

Source: Compiled from KPMG (2010) and MGI (2010)

* EMI or Equated Monthly Installment is a fixed payment amount made by a

borrower to a lender at a specified date each calendar month. EMIs are used to

pay off both interest and principal over a specified period.

In recent years, effort to construct and reconstruct perception of affordability has

been directed to somewhat broadening of the definition while remaining within

the basic framework of affordability as a ratio of price/rent of housing to

household income. The NUHHP 2007, while attempting to chart a path for the

nature of state involvement in the housing sector for the future, ‘diversified’ its

definition by treating it as a ‘concept’ that cuts across income or context bands. It

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prescribes ‘affordable housing for all’ as a key element to achieve sustainable

urban development, taking ‘affordability’ equation out of the exclusive domain of

the ‘lowest segment’ of the population. A Task Force in 2008 recommended

affordability levels (Table 3) for EWS, LIG and MIG by correlating affordability

with income, which has gained ground. The proposal recognises that housing

cost-to-income ratio differs for different income groups and that lower income

households pay much less than higher income households. But, there are

conceptual flaws in such deliberations, which make such interpretations not an

end but a means to an end. Affordability defined solely as ability to pay ignores

the appropriateness in terms of household size, location, or different forms of

quality such as amenities. It also excludes transaction costs or the recurring costs

such as maintenance and utility or even cost of commuting to a work place.

Practical definition of affordability is hard to determine given differing notions on what comprises affordability and the contextual differences across households and housing markets for a country as diverse as India. There is a good rationale for continued use of the 30/40 affordability rule generally because it provides continuity with traditionally used measures and also because it can be easily implemented. However, clear distinction should be made with reference to the target group(s) for whom affordability is being determined. Housing affordability of an EWS ought to be viewed with the same lens as the middle or even lower middle class.

Table 3 Affordability ratio of different income groups Income group EMI/Rent to Income Ratio Cost of Housing to

Income ratio

Size

EWS/LIG >30% > 4 times household

gross annual income

28-56 m2

MIG > 40% > 5 times household

gross annual income

>112m2

Source: Parekh, (2008)

Housing size has been a barometer for affordability in India and the government

has a history of juggling with it to establish affordability levels. The NUHHP, 2007

recommended reduction in minimum standards by legislation to make the cost

accessible to different income groups (Kumar, 1989). Subsequently the 1990 draft

aimed at preventing luxury housing by reducing plot size from 2000m2 to 120m2.

The historical ‘space squeeze’, as a tool for lowering the cost, has continued in

some of the EWS homes under JNNURM and developer homes such as Shubh

Griha and Sukhobristi. In essence market has determined its own interpretation

and categories (Table 4). Most recently, the Task Force in 2008 favoured raising

the size threshold from 25m2 to 28-56m2 for the deprived segment. While this does

not represent a significant increase, these normative prescriptions have been

perceived to be counter-intuitive to both scale of production and affordability.

According to MGI (2010) a 25m2 threshold is prohibitively expensive as the

average cost of providing such a minimal housing is around INR440,000

(US$8,000) including land and tertiary infrastructure with a lower bound of cost

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involved and where subsidy is not available. The corollary to this view is that for

many, despite the modest size, the new housing will still be an improvement from

the cramped conditions they live in. The inordinate focus on size has also

obscured potential of innovative design to bridge the imbalance in space use and

lower costs.

Table 4 Housing categories scenario in India Housing category Income class threshold

in INR

Value of homes in INR

in million

Average space

consumption per

household (in m2)

EWS > 2000 (US$36.36) - > 28

LIG 2000-5000 (US$36.36) 0.1-0.2 37-75

MIG 5000-10,000

(US$36.36)

0.2-0.4 75-93

Higher middle

income

10000-200000

(US$36.36)

0.35-0.8 93-121

HIG 200000-500000

(US$36.36)

0.8-1.7 116-162

Luxury 500000 plus (US$36.36) 20 + 232

Source: KPMG (2010)

Most market studies are however geared towards identifying market

opportunityiv rather than engaging in any debate on conceptual or theoretical

basis of government interpretation of affordability. Supporting the general thrust

of the government’s view that affordability can occur at every level, they offer a

far more useful income categories and their market capitalisation based on the

size and build costs (Figure 1). The corollary to this view is that in Tier 1 cities

such as Mumbai, housing shortage encompasses even households earning up to

INR500,000 (US$ 9090) a year, assuming an income outlay of 35 per cent (MGI,

2010). Such segmentation may be a tool for a more effective targeting of

investments and identifying gaps in market, it is also a carefully crafted argument

to cut out distinctive roles for the state and the market. The developers’

concentration on providing low to middle income housing and include the lowest

income bracket confirms this.

Figure 1 Urban Income pyramid in India (MM denotes Million)

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Source: MGI (2010)

The neoliberal interpretation of affordable housing that conveniently establishes

itself in the broad mindset of the policymakers as well as private developers has

philosophical ramifications. As the national developers such as DLF, Omaxe,

Raheja, Ansals and Unitechs plunge into building homes in the affordable range

the focus is rapidly moving away from providing housing to the bottom 30% of

the housing population which has an income less than INR5000 (US$90) a month.

The brief history of neliberalism has shown obsession for hyper forms and mega

construction and a much reduced appetite on aspects such as affordable housing”

(Banerjee-Guha, 2009, 105). Second, with the entry of large developers, housing

quality and standards are consistently rising and middle class ‘dream’ is being

conveniently passed on to the urban poor. Developers seem to be capitalizing on

what Leeds (1971) believed that the ‘behaviours of the impoverished would

mirror that of more affluent citizens if restrictions were lifted from their

consumption options’. A survey of some of the upcoming projects in cities as

diverse as Mumbai and Rewari in Haryana confirms that the key ingredients of

‘middle class aspirations’ commonly associated with homes costing INR 6 million

(US$0.1million) have also occupied centrestage in the affordable homes costing

1/12th of that price. Playgrounds, gyms, 24X7 security systems have all become

the norm. These ramifications reflect the start of the great denouement of the

stereotype that defines affordable housing in India today even if it is also laden

with high dose of hubris.

The next section explores Sukhobristi housing development. The information is

based on the field visits in 2007 and 2011. Some of the numeric details have been

obtained from KMDA and the developer.

4 The evolution of developer-initiated affordable housing: An example

The Sukhobristi (Shower of Joy) covers about 60 ha in Rajarahat Kolkata. Located

approximately 10 Km from central Kolkata it is the largest mass housing project in

New Townv consisting 20,000 flats (for an estimated 100,000 population) aimed at

lower and mid-income groups. It is a fascinating model not only for being a

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flagship public-private partnership project but also because it signifies

neoliberal interpretation of mass housing for the urban poor. As a partnership

project, it seeks to satisfy both public and private goals. The strategy adopted

was to roll out a replicable, contemporary design of homes that is affordable and

of acceptable quality. Homes are sold at levels nearly half of market rates, and

strikingly, on freehold basis without any restrictive covenants on the titles, or

restriction to maintain affordability to perpetuity. As a result, homes are now

available in the second hand market at approximately double the original price.

Developed by the group which has constructed higher-end housing such as the

60 stories Imperial Towers in Mumbai – India’s tallest residential towers to date,

Sukhobrishti has the hallmark of lifestyle logic flowing from luxurious apartments

offered at unbelievably low price tag. The following sections examine key

features and the extent to which these suggest the emergence of new affordable

housing paradigm.

Figure 2 Sukhobristi Master Plan and building features Source: Sbaspectra Consultants Housing provision and facilities: middle class dream exemplified

The project provides two types of apartments in 60:40 split: one-bedroom units

with carpet area 30m2 originally sold for INR285,000 to 300,000 (US$5181-5454)

and the two-bedroom units with carpet area 44.5m2 for INR570,000 (US$10,363).

As such housing size stays within the range recommended by the NBC as

minimum standards and is the principal measure of quality, although housing

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quality is a composite good (Fiadzo, 2001). Apart from the size, it is the higher

density (300 units per hectare) that has led to higher output. The ‘low-cost-high-

rise’ approach contrasts the traditional practice in India that sees ground plus

four-storey as a norm and density band set by NBC (125-150 units per hectare for

metropolitan urban areas). Notwithstanding development regulations are applied

with considerable local and regional variations, their application in Sukhobristi

demonstrates radical changes. In terms of house type, the project is a major

departure from the government policy to promote mixed-income housing or

international trend of integrating affordable housing within the market housing

(Tiesdell, 2004). The high concentration of lower-end housing ensures effective

targeting and inhibits speculative buyers, but, runs the risk of creating areas of

deprivation amidst a fairly affluent suburban setting.

Sukhobristi is conceived as self-contained constellation of residential apartment

blocks with shopping malls and entertainment facilities. According to the

municipal laws, Sukhobrishti falls in category ‘B’ municipality complex requiring

proper social infrastructure including a health care centre. It consists of 37162 m2

shopping floor, speciality retail, banks, and a post office. The developer has

managed to provide plenty of green spaces and parking. Overall, facilities

provided obscure Sukhobristi’s distinction with other middle-tier housing

schemes, although variations in the quality and level of these facilities can be

found. Tiesdell (2004) observed that development standards between market-

rate and affordable units may differ in obvious factors such as garden size and

parking provision. In terms of perception, the ‘feel good factor’ that is associated

with the name Sukhobristi is everywhere, from the façade of the most upmarket

shopping centre to the humblest rubbish bin. A closer look behind the gates

reveals a mimicry of world of middle- and upper-class lifestyles. The residential

blocks may not be post-modern architectural pastiche, or adorned with classical

and baroque details, but each block exhibits individually tailored approach to

make the new owners feel privileged. They clearly have a gated feel with a

guardhouse, uniformed security men and close-circuit systems. The shopping,

entertainment areas are similarly, if less conspicuously, protected. Residents are

given the option to avail facilities such as fitness clubs, and swimming pools. Most

residents commute to Central Kolkata for jobs, relatively cheap transport in

Kolkata compensates. As such New Town has been developed as an Integrated

development (commercial, leisure, residential and light industrial such as IT

Parks etc). In its facilities and amenities, the Sukhobristi model reinforces

middle-class aspirations and values in contemporary India. It provides more than

just housing for its residents – a carefully packaged new way of life. Despite

being located some 10 km from Kolkata at a rather isolated location and it's high-

rise mass housing character, built contrary to traditional housing with shops and

workshops, and streets where trade, production, social contacts, etc foster,

Sukhobristi appears to be a feasible solution to the overpopulated country.

Use of subsidy as a catalyst

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An ongoing challenge for the government in India has been how best to meet the

cost of affordable housing without government direct involvement and by

developing and implementing a subsidy mechanism that can be differentially

rewarded to the developer. Past PPP projects focused on High Income Group

(HIG) subsidizing LIG units resulted in lower overall production and even lower

proportion of low income homes in the project (Sengupta and Tipple, 2007)

indicating higher cost per subsidized unit. Either direct subsidy through land or

cross-subsidizing housing production, both have no visible budgetry cost to

either parties (government or private developer), and are hence popular.

At the first instance the model could be branded as a single sector, risk-prone

model potential for failure. The Sukhobristi model is unique for absence of HIG

and an offsite subsidy. Within the framework of direct supply-side subsidy,

WBHIDCO offered 50 acres of land to the developer in the new town at the

submarket price for developing IT and ITES type uses on a condition that the

developer would not compromise with the public goals broadly determined by

the government. Public leverage has a particular significance in strategies for

disadvantaged communities, and Sukhobristi’s outcomes are keenly watched by

policymakers and market. It is out of the scope for this paper to debate whether

or not public funding has benefited the target group. It is my contention that

lower supply and lack of means-testing will always exacerbate the problem.

From interviews it was evident that speculative buying that took place in

Sukhobristi is done mainly by small brokers in the lower echelons of pecking

order rather than by the organized upper class. For the policymakers, eligibility

criteria for affordable housing remain a grey area and it is important that policies

are introduced to select the real poor.

Marketing approach

Notwithstanding converging architectural and lifestyle trends of different income

groups, Sukhobristi represents a new way of offering affordable housing for

consumption, which attempts to be different from the usual middle class housing.

Distinctions can be detected in the advertisement and marketing rhetoric. First,

marketing for affordable housing is grounded not so much on the global identity

but on the quintessential Indian and regional (Bengali) identity. Right from the

name ‘Sukhobristi’ (having Sukho – happiness and Bristi-shower in Bengali).

Marketing brochures claim ‘a blend of modernism and the true essence of

Bengal’iii. Second, the distinction can also be made in terms of greater alignment

with the needs of the poor. Community facilities provided - especially, schools

and health centres - are seemingly most important services that majority urban

poor have limited access to. Native design parameters – street side entrance,

shaded walkways and a compact design have been pro-poor. In facing

NIMBYism, architects often resort to aligning with high-end counterparts for

acceptability. (Ahrentzen, 2006). Sukhobristi’s layout is simple and

straightforward and devoid of gimmicks such as open-style kitchen, level

difference within dwelling units. The building façade looks interesting with the

use of white, grey and yellowish cream colours.

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In sum, the Sukhobristi model has proved that it is important to recognise that

affordable housing represents one of several ‘spaces of consumption’ in which

the both housing price and design that draw people need to be increasingly

contextualised, and at the same time hybridized, while enabling the consumer to

experience them as part of a wider suite of experiences.

5 Affordable housing: paradigm shift or riding the wave?

An emerging trend in affordable housing in India points to the changing direction

in the way it is produced and consumed - from being entirely state-produced, low

density, low quality housing to those that are high density, premium quality and

low-to-moderately priced. They are also produced either by the private or

public-private enterprises for the consumption of a wider section of the society.

The new affordable housing projects such as Sukhobristi are unquestionably

superior to the large ghettoized ‘slum conditions’ that blight major cities of India.

They provide facilities and amenities that urban poor are traditionally deprived

off. Higher quality and better facilities may eventually engender price rise per

affordable unit, they will likely endure longer than a public housing project and

be better managed. Several factors have contributed to this shift. Broadening of

the definition of affordable housing has removed the negativity surrounding the

terminology and increased market appeal. The lull in the luxury housing market

in India owing to global economic downturn has forced developers to diversify

and explore alternative markets with lower risk and greater return.

Concomitantly, the middle class value systems and preferences are rapidly

penetrating the mindset of the urban poor - their concept of ‘home’ now changing

from yesteryears’ user-initiated incremental building to ‘ready to move’ flats.

Expansion of access to credit facilities to many low-income families has pushed

them into the kind of ‘home-buying obsession’ usually associated with middle

class.

Nonetheless, the ‘neoliberal’ interpretation of affordability currently being

articulated in India is problematic as it fails to satisfy some of the basic conditions

essential for a viable affordable housing market. First, the expression of

‘affordability’ using income and space thresholds does not work for diverse

context across different cities. For instance, there may be very few households in

Mumbai with incomes well below EWS limit but still find it impossible to access

any type of unsubsidized housing given the exorbitant price tag attached to real

estate in Mumbai and will be forced to live as slum or squatter residents. Housing

is a location specific issue, which calls for income limits and affordability levels of

EWS, LIG and MIG to be defined at the local level. Second, while the building

industry will benefit from lower costs of standardized design, building materials

and techniques through higher overall output, the approach is contrary to user

compatibility, in terms of quality and sustainability needs. Whether the lower end

affordable housing at INR300,000 (US$5455) or the higher end semi-affordable

housing priced at INR3 million (US$54545), both are subject to the same

entrapment as property developers broadly bracket them as ‘one- to three-

bedroom apartments’ with a pool and a gym, 24-hour water and security backups

as standard. Quality itself is a dynamic magnitude and incorporates several

14

factors in one single bundle, which represent household preferences and

lifestyles and the choice that people make about how much housing to consume

relative to other goods (Lee, 1990; Quigley and Raphael, 2004; Keare and

Jimenez, 1983). Thirdly, current affordable housing initiatives do not focus on the

poorest in the society, where housing poverty is mostly concentrated.

There are other important lessons that emerge from Sukhobristi, which point to

continued challenges in developing affordable housing. The project shows the

given limited availability of land in urban areasvi, it may still be unviable for

developers to provide affordable housing without some form of state subsidy. In

other words, recognition that land provision for social housing is not easily

available within the context of the market conditions, makes a strong case for

government intervention for the provision of land (Whitehead, 2007). By the same

logic, it would not be economically prudent for the government, which is the

supplier of the land, to develop affordable housing in a more centralised location

even if it means commuting cost could be lot lower. The model also shows that the

‘offsite subsidy’ model instead of the traditional ‘on site cross subsidy’ results in a

better value through higher output. It also helps to reinforce the notion that

relaxing regulations positively affect the supply chain resulting in higher overall

output. By removing constraints on density, unit size and FAR it was possible for

Sukhobristi to achieve higher output thereby reducing the cost per unit overall.

Effects of stringent regulation affecting ‘affordability’ have been well

documented. Bertaud, Buckley, and Owens (2003) found the restrictive limitations

on building heights in Mumbai bid up housing costs for lower income families by

as much as 15 to 20 percent of income. Sukhobristi confirms a positive outcome

from what has been termed ‘slow but steady progress’ to relax these regulations

over the last decade or so (Bertaud, 2010). It is evident that private sector will

likely capitalise on this to supply homes to the burgeoning middle class in the

short term, but the need to accelerate the drive to reduce regulatory barriers

persists.

The model also flags up challenges that persist in areas of finance. In the face of

limited supply relative to strong pent-up demand, access to finance becomes a

determinant for access to housing. Commercial banks typically do not serve low-

income groups below the ‘viable’ threshold to ensure repayment, or who cannot

provide collateral for loansviii, especially given the disproportionate increase in

house pricesix relative to increase in household income observed in recent years.

Microfinance institutions have attempted to fill this gap since the 1980s when

need to develop effective financial intermediaries was first identified. But their

performance in urban areas has been dismal due to longer period of housing

loans (typically between five to seven years minimum, if not more) and larger

amount of loan needed. Smets (2006) laments over the big loans increasingly

being the norm, which is contrary to incremental building practice of the poor.

Given the cheapest affordable unit in Sukhobristi costs INR300,000 (US$5454),

without access to finance, it is still out of bound for many. There is a continuing

15

challenge to evolve a system for financing housing loans on a large scale for the

lower income groups.

6 Conclusion

This chapter aimed to capture the contradictions and paradoxes, and the manner

in which the concept of affordability is embedded in both discourse and practice

in India. On one hand, westernization, often considered analogous to

modernization has influenced the consumption and production patterns affecting

affordability. On the other, multiple actors have used affordability, as an idea, for

various purposes. For policymakers it has been a fertile ground for

experimentation. For the market it is an untapped segment of the consumers,

which can lead to high degree of profitability using the same design, construction

and marketing templates used for the luxury housing. The complexity

surrounding the perception and implementation of affordability suggests that

there is no single measure for assessing the nature and degree of housing

affordability problems.

Sukhobristi as an embodiment of modern day affordable housing helps, at

conceptual level, to initiate a great denouement of the stereotype that defined

affordable housing for much of the previous half a century. There is a greater

recognition among developers of the need to bring affordable housing from the

shadow of marginalisation into the mainstream and through the benefits from

globalisation – of high quality products and services – trickling down to the low-

income segment. Current trends also reflect uniformity and standardization in

housing offer, which is not necessarily a bad thing given the country’s gigantic

need for affordable housing. Sukhobristi model also helps to reconfirm the

importance of land subsidy, regulatory reforms and widening of finance access to

enhance affordability of the poor.

No doubt Sukhobristi presents an interesting proposition, questions still remain

as to how far it is representative for urban India? Or, for “affordable housing” in

urban India? Whether it heralds a paradigm shift in affordable housing provision

in India? Answers to these fundamental questions lie in the context of where

Indian housing is situated – lack of supply and unprecedented demand within the

neoliberal context. The neoliberal context itself is inevitably exclusionary

through its focus on extending home ownership and the role of market (Malpass

and Murrie, 1999, 82). This implies that not need but demand would be the key

for housing production and consumption under such conditions. There are

numerous detailed matters in Sukhobristi such as maintaining affordability to

perpetuity, effective targeting or an intent to target the most needy in the society

still unresolved and they do point to methodological flaws in the basic notions of

16

market development and participation in housing provision. Notwithstanding

these issues make the model far less paradigmatic, its potential to be one cannot

be undermined. It is a quintessentially neoliberal model, where state and private

sector have played out their envisioned role. It is also a manifestation of the

recognition to the target group for affordability, which may or may not be the

most needy. It has to be understood that Sukhobristi is just one of the tiny cogs

in the much bigger supply chain and that the scheme does not aim to solve

the whole housing affordibility problem in India. But it is the potential of

replicability of the scheme of this nature, which gives us hope for solving

India’s housing problem, eventually. Whether or not ‘Sukhobristi model’

survives the test of time, it can be argued that the new policy principles and

practices associated with the project will be reshaping the affordable housing

policy landscape for the foreseeable future.

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i Central government in India uses income threshold as a benchmark for prioritizing welfare policies: up to INR1,999 (US36.36) in the EWS; between INR 2000 and 3999 (US36.36 – 72.72) in the LIG; between INR5000 and 9999 (US90.90– 181.8) in the MIG and more than 10,000 (USD181.8) in the HIG. State governments have been given freedom to determine their own threshold and as a result there is a considerable variation in practice. ii For instance, in the fist Five Year Plan, 7.4% of the total plan resources were allocated for housing. Its share in the subsequent plan resources ranged between 1.2% and 4.9%. iii For instance, during the first three years of the Tenth Five Year Plan, (2002–05), the Apex Co-operative Housing

Federations raised INR17.74 billion (US$322 million) from various funding agencies such as LIC, NHB, HUDCO, Commercial and Co-operative Bank.

iv A study (KPMG, 2010) puts the housing requirement for the sub- INR100,000 (US$ 1818) income group across seven

major cities at 2.06 million units - a market size of INR3,300 billion (US$ 60.5 billion).

v New Town is the first planned satellite town at the outskirts of Kolkata. It covers 3550 ha and is estimated to provide

housing and employment opportunities to an estimated 5 million population.

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iii Comparable expressions can be found in Tata’s Shubh Griha (the ‘nano’ home) whose brochures claim “every feature is

inspired by and reminiscent of the cultural splendour of Gujarat”; even though the project was designed by Toronto based architects. vi The Town and Country Planning Organization (TCPO) suggests to cater to the demand of EWS and LIG category alone

would require 84,724 to 120,882 hectares of additional land. Land as a state subsidy is not unique to India.

viii

The ‘bias’ is visible from over 73% housing loans extended by HFCs exceeded INR300,000 (US$ 5454) and 93% exceeded INR100,000 (US$1818).

ix A recent survey shows (Lloyds, 2012) Indian house prices have risen by most since 2001, having increased by 284% in

real terms (i.e. after allowing for consumer price inflation) since 2001 – equivalent to an average annual rise of 14%. This is almost six times the 50% rise in real UK house prices over the same period and over 10 times the 23% rise seen in the Euro area.